United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER
THELTON E. HENDERSON, District Judge.
This matter came before the Court on April 14, 2014, on the motion of Defendant Sunlink Corporation ("SunLink") to dismiss, or, in the alternative, transfer to the United States District Court for the Southern District of Florida Plaintiff Hypower Inc.'s ("Hypower") Petition to Vacate Arbitration Award ("Petition to Vacate"). After carefully considering the written and oral arguments of the parties, the Court GRANTS SunLink's motion to TRANSFER the Petition to Vacate under the "first-to-file" rule for the reasons discussed below.
The instant motion arises out of a Petition to Vacate an arbitration award filed by Hypower in this Court on February 18, 2014, although the history of the dispute between the parties is significantly older. A brief summary of the facts and procedural history follows. The underlying dispute relates to SunLink's alleged breach of contract and tort claims stemming from the design and construction of a roof-top solar power facility in New Jersey. On November 18, 2011, SunLink filed a demand for arbitration with the American Arbitration Association ("AAA"), asserting causes of action arising out of the contracts executed between the parties. Thereafter, on May 4, 2012, Hypower filed suit in the 17th Judicial Circuit Court in Broward County, Florida. SunLink timely removed the case to the United States District Court for the Southern District of Florida ("Southern District of Florida") on June 6, 2012, invoking that court's diversity jurisdiction. See Hypower, Inc. v. Sunlink Corporation, No. 12-cv-61119-CIV-ZLOCH, Docket No. 1 (S.D. Fla. Jun. 6, 2012) (the "Florida Case" or "Florida court"). Hypower is a Florida corporation with its principal place of business in Broward County, Florida, and SunLink is a Delaware corporation with its principal place of business in San Rafael, California.
SunLink thereafter moved to stay the Florida Case and compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 4, which the Florida court granted on March 13, 2013. In determining which arbitration provision in the various agreements controlled, the Florida court found that the applicable dispute resolution provision required any dispute be resolved in "binding arbitration, " administered by the AAA under its "Commercial Arbitration Rules, " that the location of the arbitration will be in San Francisco, California, and that "any judgment on the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction." Florida Case, Order Compelling Arbitration and Staying Action, Docket No. 30 at 3, 5. The Florida court compelled arbitration before the AAA in San Francisco, stayed the Florida Case pending resolution of the arbitration, and directed the parties to "notify the Court immediately upon any settlement" or "upon resolution of arbitration." Id. at 12.
On January 30, 2014, a panel of AAA arbitrators in San Francisco resolved the matter in favor of SunLink, and awarded SunLink certain damages, attorneys' fees and costs, and administrative fees and expenses (the "Arbitration Award"). On February 6, 2014, SunLink notified the Florida court of the arbitration award, petitioned that court to confirm it pursuant to 9 U.S.C. section 9, and sought entry of final judgment. Florida Case, Docket No. 31. On February 18, 2014, Hypower filed the Petition to Vacate in this Court. On February 20, 2014, Hypower moved the Florida court to transfer that case to the Northern District of California, or, in the alternative, to stay the case pending this Court's resolution of the Petition to Vacate. On March 7, 2014, SunLink moved this Court to dismiss the Petition to Vacate or transfer it to the Southern District of Florida under the first-to-file rule. The Court heard argument on the instant motion on April 14, 2014.
The "first-to-file" rule is a "generally recognized doctrine of federal comity which permits a district court to decline jurisdiction over an action when a complaint involving the same parties and issues has already been filed in another district." Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). This rule "promotes judicial efficiency and prevents the risk of inconsistent decisions that would arise from multiple litigations of identical claims, and thus should not be disregarded lightly.'" Meru Networks, Inc. v. Extricom, Ltd., No. C-10-02021 RMW, 2010 WL 3464315, at *1 (N.D. Cal. Aug. 31, 2010) (citing Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 625 (9th Cir. 1991)). At the same time, it is "not a rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates of sound judicial administration." Pacesetter, 678 F.2d at 95. Thus, the Ninth Circuit has recognized exceptions to the first-to-file rule under various circumstances, such as bad faith, anticipatory suit, and forum shopping. Alltrade, 946 F.2d at 628. Thus, in these situations, a court "can, in the exercise of [its] discretion, dispense with the first-filed principle for reasons of equity." Id.
SunLink moves to dismiss, or in the alternative, transfer Hypower's Petition to Vacate the arbitration award rendered by the AAA to the Southern District of Florida. SunLink argues this relief is justified by the first-to-file rule because the Florida court stayed the underlying action pending the arbitration that it compelled, and retained jurisdiction by requiring the parties to notify the Court upon settlement or resolution of arbitration. Hypower contends that, in light of Atlantic Marine Construction Company, Inc. v. United States District Court for Western District of Texas, et al. (" Atlantic Marine "), 134 S.Ct. 568 (2013), dismissal is inappropriate because of the existence of a forum-selection clause, and that transfer under 28 U.S.C. § 1404(a) should be denied because the Northern District of California is a more appropriate forum. As explained below, this Court finds that federal comity militates in favor of transferring the Petition to Vacate to the Southern District of Florida under the first-to-file rule.
I. The Florida Case Is the First-Filed Action Under the First-to-File Rule.
"Absent an exception to the first-to-file rule, a court of second-filing will defer to a court of first-filing, if the two matters before them exhibit chronology, identity of parties, and similarity of issues." Intersearch Worldwide, Ltd. v. Intersearch Grp., Inc., 544 F.Supp.2d 949, 957 (N.D. Cal. 2008) (citing Alltrade, 946 F.2d at 625-27). As the first-filed Court, the United States District Court for the Southern District of Florida is owed deference in this matter.
The Florida Case was filed before this matter. Hypower filed suit in the 17th Judicial Circuit Court in Broward County, Florida on May 4, 2012, and SunLink removed the suit to the Southern District of Florida on June 6, 2012. "[T]he filing of actions in coordinate jurisdictions [is what] invokes considerations of comity." Pacesetter, 678 F.2d at 96 n. 3. After the AAA rendered its decision, on February 6, 2014, SunLink notified the Florida court of the Arbitration Award, and invoked that court's jurisdiction again by petitioning for confirmation of the Arbitration Award pursuant to 9 U.S.C. section 9. Hypower did not invoke the jurisdiction of this Court until it filed its Petition to Vacate in the Northern District of California on ...